$11,700 is invested in a compound interest account paying 3.9% compounded quarterly. How much will be in the account after 18 years?
Round your answer to the nearest cent.
Pam has $40 in a savings account that earns 10% interest, compounded annually.
To the nearest cent, how much will she have in 2 years?
http://qrc.depaul.edu/StudyGuide2009/Notes/Savings%20Accounts/Compound%20Interest.htm
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
To find the amount in the account after 18 years with compound interest, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount in the account
P = the initial principal (starting amount)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years
In this case, we have:
P = $11,700
r = 3.9% (or 0.039 as a decimal)
n = 4 (quarterly compounding means 4 times a year)
t = 18 years
Plugging in the values into the formula, we have:
A = 11700(1 + 0.039/4)^(4*18)
Calculating the exponent first, we get:
(1 + 0.00975)^(72)
Then, calculate the base raised to the exponent, and multiply it by the principal:
A ≈ 11700 * (1.00975)^(72)
Using a calculator, we find:
A ≈ 11700 * 1.758535668
A ≈ 20,568.98
So, the amount in the account after 18 years would be approximately $20,568.98.